The prepaid cards market has been forecast to reach a value of US$2.1 trillion by 2018, driven by the rising demand from unbanked consumers and the financial services sector.
Prepaid cards represent an attractive proposition in the payment industry owing to their inherent flexibility and convenience.
Prepaid cards can be comparable to credit or debit cards as many of these cards are issued under the international card schemes (Maestro, MasterCard, or Visa).
The market is expected to witness growth supported by a host of factors such as rise in the number of consumers preferring payment cards over traditional banking, entry of new brands, and pull back of free checking facility for low balance consumers by banks.
Moreover, with credit card interest rates rising each year, consumers are shifting to alternate payment modes such as prepaid cards. Another growth driver is e-commerce as consumers use prepaid cards instead of credit or debit cards for making online purchases.
Some prepaid cards can be purchased, loaded with a specified value, and used until the funds on the card have been spent, while others are re-loadable - and can be 'topped-up' in much the same way as you would a 'pay-as-you-go' mobile phone.
Prepaid card users are most likely to be those who have no other access to card payments, teenagers and young adults (e.g. for budgeting at university) or travellers. One of the main advantages is that there is no possibility of exceeding spending limits.
The United States represents the single largest market worldwide. Over the last three years, consumer ownership of prepaid cards climbed rapidly, and today over 13% of US adults now has a prepaid card. Between 2009 and 2012 consumer ownership of prepaid cards climbed 71%.
And prepaid purchase volume is expected to grow from approximately $150 billion this year to nearly $200 billion in the next five years, a compound annual growth rate of 5.66%. The tremendous potential in direct deposit account and payments markets are expected to spur market growth.
For more information on the prepaid cards market, see the latest research: Prepaid Cards Market
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